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| Flat panel TV prices set to rise despite Budget sops
Chennai: The prices of flat panel display (FPD) TVs are unlikely to come down in the near future, despite the Budget proposal to cut Customs duty on LCD modules (panels) from 10 per cent to 5 per cent.
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The LCD module is the key component and forms close to 70 per cent of the cost of a television set, and the 5 per cent cut on customs duty, in reality, would mean around 3 per cent on the complete TV.
The Indian market is still in its nascent stage for FPD TVs, and the business is yet not very lucrative. In an effort to drive the business and market size, most manufacturers compromise on profits.
"This is all the more glaring in the small-screen segment (below 26") where a few of us take a strategic loss. This is an effort to drive all the markets towards this segment. The cost to promote too, is very high," says Amitabh Tiwari, Business Head, Home Entertainment Business, LG Electronics India (P) Ltd. The prices, hence, are not dropping as reported. "The Customs duty drop will perhaps help us in absorbing increasing costs partially, going forward," he says.
According to Tiwari, the cost of LCD modules will see at least 30 per cent increase in the next six months as the global demand exceeds current supply. The price hikes can be attributed to a variety of factors including rush orders from Chinese manufacturers looking to meet rising demand in the domestic market.
In India, with over 65 per cent market share, the Korean players, Samsung and LG, dominate the seven-lakh-unit a year LCD TV market. They both say they have no plans to cut LCD TV prices in the foreseeable future.
On the contrary, LCD TV prices may go up over a period as prices of modules (panels) are headed up in the global market on tight supply and increasing demand.
In fact, LG increased LCD TV prices by an average 5 per cent effective July. "We are not in a position to roll that back immediately," says Tiwari.
TV prices are expected to go up by the end of the year or perhaps early next year – once the festival sales period of 2009 – beginning with Onam in Kerala, Dussera in the southern and eastern States and till Diwali - gets over.
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Ravinder Zutshi, Deputy Managing Director, Samsung, says as the company's LCD TVs are on promotional offer (every TV comes with an AirTel DTH connection), it has no plans to drop the prices for now.
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